The deal, for an undisclosed sum, will bring together 17 Bay Area offices and more than 430 real estate professionals, with combined sales volume projected to reach $2.2 billion this year. As recently as 2000, Pacific Union alone was boasting sales of $3.2 billion, a difference that highlights the recent fallout in the brokerage industry and strongly hints that Morgan Lane picked up its rival at a discount.

Mark McLaughlin, chief executive officer of the Marin real estate company, said he pursued the deal because it offered a chance to inject the entrepreneurial attitude of his high-end-focused firm into a dominant local brokerage. Pacific Union is among the top five regional real estate companies and also focuses on the luxury end.

"The fundamentals are the same; they just have a much larger geographic footprint," he said.

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But the deal presents real risks for the leaders of Morgan Lane, who will suddenly oversee a far larger and more generalized operation at a point when most brokerages are struggling, said Charles Moore, CEO of San Francisco firm McGuire Real Estate.

"The companies that don't have the staying power and wherewithal will pop and they're not all small boutiques," he said.

Indeed, the real estate brokerage industry has already significantly consolidated through acquisitions and closures in recent years, as soft housing sales and plummeting prices shrink the industry's commissions. The California Association of Realtors has seen membership fall from 199,168 in 2006 to 163,610 today, the Los Angeles trade group said.

Pacific Union itself has been something of a hot potato in the brokerage world. The residential arm of GMAC Financial Services agreed to acquire the company in 2000. But by last September, the Detroit financing company was bleeding money and announced plans to fire up to 5,000 employees in the division and sell off its home-services unit, including Pacific Union, to Brookfield Asset Management Inc.

Morgan Lane is buying Pacific Union from Brookfield, but as part of the deal, both firms will operate as Brookfield franchises, which provides additional marketing power and places them in a national referral network, McLaughlin said. The two companies will continue to operate under their existing names.

McLaughlin said he is confident the timing of the deal is right, because the number of new escrows has been climbing around the region since late March.

"We're optimistic that the worst is behind us, although we're prepared for a lumpy recovery," he said.

Avram Goldman, CEO of Pacific Union, will take on the role of strategic adviser after the sale. He said the combination will allow the brokerage to reconnect to entrepreneurial roots that were severed during the stewardship of two successive corporate owners.